BUSI­NESS Bit­coin Cash’s fate doomed un­less it stands out from its cryp­tocur­rency ri­vals

Weekend Argus (Saturday Edition) - - FRONT PAGE -

MOSCOW: The newly es­tab­lished Bit­coin Cash cryp­tocur­rency will not out­live Bit­coin and ri­val dig­i­tal cur­ren­cies, amid the rapid growth of dig­i­tal pay­ment sys­tems, un­less it of­fers ex­clu­sive ser­vices to seper­ate it from the crowd, say ex­perts in the field.

On Tues­day, the soft­ware code of Bit­coin, one of the most pop­u­lar cryp­tocur­ren­cies based on blockchain tech­nol­ogy, split and gen­er­ated a new dig­i­tal cur­rency called Bit­coin Cash.

Blockchain tech­nol­ogy is a data­base, com­posed of so-called blocks, which con­stantly grows in a lin­ear, chrono­log­i­cal or­der. It is of­ten used in the sphere of cryp­tocur­ren­cies, but also could be ap­plied for other pur­poses, such as for man­age­ment oper- the last cou­ple of months. The con­cern and the fear cli­maxed a few weeks ago when Bit­coin dropped to $1 800. After it hit $1 800 in the mid­dle of July, news leaked out that we were go­ing to get past the fork with­out any prob­lems, so the price started to rally, jumped 50% and it hit $2 700 on Mon­day.”

Ac­cord­ing to Serge Schou­ter­den, a co- founder of Cryp­toAr­ti­cles, the hard fork and the even­tual split of Bit­coin due to the rift be­tween the cur­rency’s cre­ators “was to be ex­pected”.

“Bit­coin Cash is the same as Bit­coin it­self, only un­der another name. It is like all the thou­sand other cryp­tocur­ren­cies out there in the past and to­day, a lot of prom­ises but most of them, if not all fail to de­liver. Some even are ex­posed as scams by crim­i­nal el­e­ments,” Schou­ter­den said.

Years of dis­agree­ments be­tween Bit­coin’s de­vel­op­ers over its fu­ture re­sulted in the new dig­i­tal cur­rency that shares the same blockchain tech­nol­ogy, but in­creased the block size from 1MB to 8MB.

Last month, Rus­sian president Vladimir Putin said he was “cau­tious” about the use of Bit­coin and other cryp­tocur­ren­cies be­cause “al­most noth­ing is reg­u­lated in this area at the mo­ment”.

On Wed­nes­day, Rus­sian eco­nomic de­vel­op­ment min­is­ter Mak­sim Oreshkin said the grow­ing use of dif­fer­ent cryp­tocur­ren­cies glob­ally shared sim­i­lar qual­i­ties to fraud­u­lent fi­nan­cial schemes, as this type of as­set does not usu­ally have a sub­stan­tial fi­nan­cial back-up.

Rus­sia’s con­cerns were backed by Moas, who said that it is im­pos­si­ble to reg­u­late cryp­tocur­ren­cies at this stage.

“As far as reg­u­la­tion goes, it’s very hard to reg­u­late this, be­cause it is vir­tual and de­cen­tralised. The def­i­ni­tion of de­cen­tralised is the fact that it can’t be reg­u­lated. It’s too late to reg­u­late, it’s al­ready got­ten so big. The ge­nie is out of the bot­tle. There will be grow­ing pains, there will be an ex­change that maybe will go bank­rupt or it will be hacked, or run by crim­i­nals. It’s pos­si­ble.”

He rec­om­mended split­ting in­vest­ment across dif­fer­ent cryp­tocur­ren­cies in the top-20 in case Bit­coin suc­cumbs to ri­val Bit­coin Cash, or other dig­i­tal cur­ren­cies take the lead.

“What I rec­om­mend is that peo­ple split their money across five dif­fer­ent ac­counts, so you will have some of your money in Live­coin, in Coin­base, in Bitfinex, in Poloniex, in Bit­trex. No one can guar­an­tee that Bit­coin will be the win­ner here,” Moas said.

Bit­coin Cash has so far failed to gain the wide­spread sup­port and dipped over 50% in value on Wed­nes­day, after ini­tially trad­ing steadily at $700.

“There hasn’t been a lot of sup­port for the new coin and if they do not of­fer some­thing ex­clu­sive, us­able in the short or long term, it will go the same way as many other dig­i­tal cur­ren­cies out there,” Schou­ter­den said.

“Don’t get me wrong, new dig­i­tal cur­ren­cies are a day trader’s bread and but­ter but if they do not come up (with some­thing) that screams ‘this new coin will be used for this or that service ex­clu­sively’, it will not go far, in my opin­ion.”

Moas and Schou­ter­den agreed that the blockchain tech­nol­ogy would pros­per in the fu­ture and could be of use to banks and med­i­cal sec­tor, among oth­ers.

“Many fi­nan­cial in­sti­tu­tions as well as the EU are ac­tively look­ing to in­cor­po­rate blockchain like tech­nolo­gies in their day-to-day work,” Schou­ter­den said.

Moas said that Bit­coin and other cryp­tocur­ren­cies would un­dergo a boom in the next decade sim­i­larly to com­put­ers and the in­ter­net in the 20th cen­tury.

“I be­lieve Bit­coin will go to $50 000 in the next 10 years. A lot of peo­ple be­lieve it will go even higher than that, but I want to be con­ser­va­tive.”

“The con­sen­sus is that it is go­ing higher; it is just the ques­tion of how high it goes and how long it takes for us to get there. This is a big deal, this is like the in­ter­net 20 years ago, and it’s like com­put­ers 30 years ago.”

Cryp­tocur­ren­cies have no ma­te­rial form and global cur­rency reg­u­la­tion does not cur­rently ap­ply to them. An un­lim­ited num­ber of anony­mous sources can is­sue and use such cur­ren­cies.

Cen­tral banks world­wide have treated the phe­nom­e­non with cau­tion, although some have started ex­plor­ing the pos­si­bil­i­ties it of­fers, and have even de­vel­oped their own cryp­tocur­ren­cies. – Sput­nik

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